Verizon posted very modest quarterly result which included a charge for lay-off, slow growth in its wireless and broadband-to-the-home products, and a further deteriorating of its legacy landline business.
Verizon reported a loss of $.07 in basic earnings per share (EPS) in the quarter, which included $2.3 billion in pre-tax costs for workforce reductions associated with a second-quarter incentive offer that will lead to approximately 11,000 voluntary separations this year. This compares with earnings of $.52 per share in the second quarter of 2009.The company’s revenues were $26.8 billion in second-quarter 2010, a decrease of 0.3 percent compared with second-quarter 2009. The numbers included results from business it sold to Frontier Communications and a modest portion of its wireless business which it divested due to a purchase of Alltel.
Verizon had 1.4 million total net customer additions, excluding divestitures and adjustments, in 2Q 2010; 665,000 retail postpaid net customer additions in the quarter; continued low retail postpaid churn of .94%. The company has 86.2 million retail customers; 92.1 million total customers, after divestitures and conforming adjustments related to the Alltel acquisition. That means wireless subscriber growth is less than 2%.
Verizon’s fiber-to-the-home subscriber growth was very disappointing. The company added 196,000 net FiOS Internet and 174,000 net FiOS TV customers; 3.8 million total FiOS Internet customers and 3.2 million total FiOS TV customers. As of the end of second-quarter 2010, the FiOS network passed 15.9 million premises, so the take-up rate is modest
Second-quarter 2010 wireless operating revenues were $11.1 billion, a decline of 3.3 percent compared with second-quarter 2009, a sign of significant attrition in the residential phone business.
One of the most notable announcements is that Verizon is about to go into direct competition with Sprint-Nextel (NYSE: S) in the 4G sector. Verizon Wireless plans to launch the nation’s first 4G LTE (Long Term Evolution) network in 25 to 30 markets by the end of this year and cover virtually all of its current nationwide 3G footprint by the end of 2013.
It remains to be seen how many people want to upgrade from fast to super-fast wireless.
Douglas A. McIntyre
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